Fiscal policy refers to
A) deliberate changes in government spending and taxes to promote economic growth, full employment, and price level stability.
B) deliberate changes in government spending and taxes to achieve greater equality in the distribution of income.
C) altering of the interest rate to change aggregate demand.
D) fact that equal increases in government spending and taxation will be contractionary.

Question

Quizplus · Accepted Answer

Fiscal policy involves deliberate changes in government spending and taxes to achieve macroeconomic goals such as economic growth, full employment, and price level stability. It is a tool used by the government to influence aggregate demand and stabilize the economy during business cycles. Option B refers to redistributive policy, which is a different tool used to achieve greater equality in the distribution of income. Option C refers to monetary policy, which involves changing interest rates to influence aggregate demand. Option D is incorrect because equal increases in government spending and taxation can have a neutral effect on the economy depending on other factors.

Fiscal Policy Refers to